State-level Policies and The Growth of Solar Power: Interconnection and Net Metering

Last week we discussed mandatory renewable energy requirements like Renewable Portfolio Standards (RPS), the first of three key policies at the state-level that support the growth of solar energy in the U.S. This week, we will address the second two methods of promoting solar power use, Interconnection and Net-Metering.

Unlike conventional power sources, solar power generation varies depending on the time of day and year.  Sometimes, solar system produces more power than what is being used on-site. Government policies such as Interconnection and Net-Metering permit consumers to sell this unused solar power, and are important factors in the decision to install a solar energy system on consumer property.

An Interconnection Agreement is a contract between solar system owners and utility companies, which allows individual solar systems to connect with utility company’s grid. The agreement generally includes the conditions, equipment requirements, and process for connecting solar systems to utility grids that can feed electricity to customers.^[1]

Individual states regulate the process of Interconnection to maintain the stability of the power grid and the safety of those who use and maintain the grid.^[2]  In some cases, the Interconnection Agreement process is so lengthy and expensive that it hinders the development of small solar systems.^[3]  Fortunately, a significant number of states have simplified and streamlined the interconnection process for small household solar system owners.^[4]  Customers considering grid-tied renewable energy in states with well-designed interconnection procedures are able to take advantage of a process that is transparent, equitable and involves separate tiers of analysis depending on a solar system’s size and complexity.^[5]  These tiers usually contain a “fast track” for connecting simple, small, certified solar system to the grid.^[6]  According to a report published by Free the Grid^[7], Maine, Massachusetts, Utah and Virginia have the best practices in interconnection procedures.

Net-Metering

In addition to allowing interconnection to the grid, many utility companies will give credit to consumers for the unused electricity generated from their individual solar systems. This arrangement is called Net-Metering.  Net-Metering arrangements may include the amount of solar electricity that can be sold to the utility company, the rates at which the utility company will buy it, and an ending date for the agreement.^[8] Net-Metering has been described as “providing the most significant boost of any policy tool at any level of government …”^[9]  As of September 2010, 43 states, Washington D.C. and Puerto Rico have statewide Net-Metering programs.^[10]